Researching Nonprofits To Give Smart

Share

A financial audit (for all organizations with annual revenue over $500K) and memorandum on internal controls—more familiarly known as the management letter—should be available by request from the organization.

The financial audit can be considered a “triage tool” that will help you to assess the organization’s financial security based on its cash situation. The audit includes footnotes prepared by the auditor to help the reader interpret the balance sheet, income statement, and cash flow statement. The footnotes pertain to significant accounting policies and often help to explain issues such as in-kind donations, the relative liquidity of assets, etc.

It may be helpful to request management letters over several years in order to evaluate whether the organization struggles with the same issues year after year.

The financial audit can be considered a “triage tool” that will help you to assess the organization’s financial security based on its cash situation. The audit includes footnotes prepared by the auditor to help the reader interpret the balance sheet, income statement, and cash flow statement. The footnotes pertain to significant accounting policies and often help to explain issues such as in-kind donations, the relative liquidity of assets, etc.